Car hauler in dispute with GM, Chrysler;
But it's business as usual at Allied's West Seneca terminal

On a typical day, car hauler Allied Systems Holdings delivered vehicles to auto dealerships for customers including General Motors and Chrysler.

But things between the two automakers and Allied are anything but normal now. GM filed a lawsuit accusing Allied of "holding hostage" its vehicles, and Chrysler has filed a separate suit seeking release of its vehicles.

Georgia-based Allied has a terminal in West Seneca, but none of the 2,200 vehicles caught up in the dispute are parked there. And a union official said the fallout is not affecting local jobs.

GM claims Allied is improperly holding about 1,700 new GM vehicles, worth an estimated $46.6 million, at facilities in Dearborn, Mich., and Fort Wayne, Ind. Chrysler's 500 vehicles are being kept by Allied in Windsor, Ont.

Ken Nelligan, principal officer with Teamsters Local 449, said the dispute has not led to layoffs at Allied's terminal on Ransier Road, inside the North America Center business park.

"That's between Allied and the manufacturers, Chrysler and General Motors," he said. "That's not a union issue at this point in time."

"We expect we will maintain the full complement of drivers we have," Nelligan said. The site has about 54 union-represented drivers, plus some mechanics and a yard man.

The terminal manager at Allied's West Seneca location said he could not comment, and he referred questions to Allied's headquarters in Atlanta. An official there did not return a message.

But an attorney for Allied, Michael E. Johnson, fired off a letter to GM's attorney on Friday denying Allied has refused to release GM's vehicles, calling the automaker's claim "baseless posturing." Toyota and Honda have also cut ties with Allied, according to news reports. GM's lawsuit, filed in Detroit, details how its relationship with Allied soured quickly.

GM in court papers says that earlier this month, Allied asked GM to agree to "amendments" to its service contract with Allied, including a 15 percent price increase, with increases of 3 percent per year. Allied was also facing the threat of an imminent strike by the Teamsters, after Allied tried to impose a 20 percent pay cut on its workers.

Allied backed off the planned pay cut and the Teamsters did not strike. But because GM refused the contract changes, Allied notified GM it would cease providing service to the automaker, GM said. GM terminated its contract with Allied.

A court hearing in Detroit is set for Tuesday, where the judge has told Allied to explain why the vehicles should not be released to GM. The judge also ordered Allied not to "damage, destroy, conceal, dispose of, or use" the vehicles.

Allied's attorney has pushed back against GM's accusations. In his letter to GM's attorney, Johnson asked GM to remove its 1,662 vehicles from the Dearborn location "immediately," subject to payment of storage fees of more than $30,000. "If GM fails to remove the vehicles and pay Allied the storage fees due, Allied intends to enforce its statutory liens with respect to the vehicles," Johnson wrote.

As for the removal of 42 GM vehicles at the Fort Wayne site, Johnson said GM can retrieve them when it pays Allied "outstanding carriage charges due to Allied" that it estimated at $2.3 million, plus $1.3 million Canadian, not counting amounts due for vehicles in transit and fuel charges the company was calculating.

Johnson accused GM of rushing to sue before attempting to resolve its issues with Allied, adding GM had "no basis" for ceasing payments to Allied for services it provided.

Chrysler filed its lawsuit against Allied in Ontario. The automaker said it has been able to retrieve 200 of its 700 vehicles so far. A hearing about the rest of the vehicles will be held Monday or Tuesday.

Chrysler has moved its business to other car haulers and is "working to ensure a smooth transition," said Katie Hepler, a Chrysler spokeswoman, in a statement. "Vehicles continue to be shipped to dealers, and we do not anticipate any disruptions in production as a result of this change." Nelligan said Chrysler work that was handled by Allied at the West Seneca site has been transferred to Cassens Transport's operation in Niagara County. But Nelligan said the West Seneca operation still has good business with Ford Motor Co.

"Their work is mostly Ford, and I understand they've picked up more work on Ford because Ford has signed a long-term contract with them," Nelligan said.

Aaron Bragman, an automotive industry analyst with IHS Global Insight, said in a report that if it is true Allied has "lost the business of three of the top automakers in the U.S. market, it cannot be long before some sort of additional action must be taken on the company's part."

e-mail: mglynn@buffnews.com

Matt Glynn – Matt Glynn has been a business reporter with The Buffalo News since 2000. He is a native of Youngstown and lives in Buffalo.